The Carlyle Group has announced that it is winding up its hedge fund management operation, Carlyle-Blue Wave Partners Management, barely 15 months after its launch in April last year, afte
The Carlyle Group has announced that it is winding up its hedge fund management operation, Carlyle-Blue Wave Partners Management, barely 15 months after its launch in April last year, after its Carlyle Multi-Strategy Partners funds lost heavily on fixed-income investments last year and failed to reach their target of USD1bn in assets under management.
In a statement, Carlyle-Blue Wave Partners Management said it had ‘voluntarily decided to end its multistrategy investment program and to begin liquidating positions in an orderly manner in anticipation of an eventual closing of the Carlyle Multi-Strategy Partners funds.
‘Though the funds’ equity-focused share class is up more than 2 per cent in 2008, beating the S&P 500 by nearly 14 percentage points, the funds launched in a challenging market and have not been able to achieve the critical mass of assets under management necessary to support a multi-strategy fund infrastructure.
The business, which had around 40 staff, was a joint venture between private equity giant Carlyle, which was a minority partner, and former Deutsche Bank executives Rick Goldsmith and Ralph Reynolds. The funds launched with capital of USD900m, but their assets have now fallen to just USD600m.
According to Bloomberg, Carlyle Multi-Strategy Partners suffered badly during last year’s credit crisis, losing 9.5 per cent in October on its debt and residential mortgage-backed securities investments before abandoning fixed-income investments, prompting redemption requests from investors. Despite the success of the switch to equities, the funds remained far short of the 9 per cent gain that would have been necessary before they could start levying performance fees.
Earlier this year Carlyle Capital Corporation, an Amsterdam-listed fund investing in mortgage-backed securities, collapsed after it was unable to meet margin calls and the highly leveraged funds saw its assets seized by its lenders.